Nyrstar repays $42 million to taxpayers as Lucas negotiates

Nyrstar will make its first principal repayment on taxpayers’ $291 million loan for the Port Pirie smelter, with Treasurer Rob Lucas using his power to approve or veto a takeover of the company as leverage in negotiations over the outstanding debt.

May 01, 2019, updated May 01, 2019
Nyrstar's Port Pirie smelter

Nyrstar's Port Pirie smelter

Lucas announced this morning that Nyrstar had committed to paying $42 million back to the taxpayer this month, $29 million of which will come off the principal debt, and the balance going to interest and fees.

“They have confirmed, yesterday and today, that they’ll make a payment this month of $42 million,” Lucas told reporters outside the State Administration Centre in Victoria Square this morning.

“We welcome this as a sign of good faith, in terms of hopefully trying to reach a successful conclusion to the ongoing discussions we’re having … with Nyrstar, and potentially with Trafigura in the near future.”

Trafigura, a global commodity trading giant and Nyrstar’s largest shareholder, last month revealed its intentions for a majority takeover of the zinc and lead miner.

Lucas told reporters that Trafigura needs his approval to do so, under the terms of the loan from the State Government.

“I do have to give authority in relation to a potential transfer of ownership, and that obviously been part of some of the discussions I’ve had,” he said.

“They are certainly aware that they require my approval as State Treasurer in relation to any potential change in ownership.

“Their timetable in terms of their takeover of Nyrstar is essentially in the period June to July.”

He said the people of Port Pirie could be assured that Trafigura was “at pains to reinforce the fact that in becoming the new owners of Nyrstar that Port Pirie is an important element of their potential global operation”.

He described negotiations with Nyrstar and Trafigura as positive and constructive, but said he could not yet say when the loan would be paid back.

“It’s too early for me to say anything definitive in relation to those final discussions other than they’ve been positive (and) constructive,” he said.

Lucas added that the Government had already received two payments from Nyrstar – in May and November last year – but that only covered interest and fees and that today’s commitment from the company would be the first to make a dent in the principal debt.

He said the May and November repayments were $7 million and $10 million, respectively.

The State Government loan underwrote part of a $660 million redevelopment of Nyrstar’s Port Pirie operations in order to secure jobs.

The company has confirmed late last year that it would cut 120 jobs from its Port Pirie operations this year.

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In a statement at the time, Nyrstar said it would “gradually reduce the number of employee positions and contractors throughout 2019”.

“As the transformation of the smelter includes shutting down obsolete and out-dated equipment, we will reduce positions at Port Pirie by approximately 120 employees and contractors in 2019,” the company said.

“We will achieve the majority of these changes through natural attrition, a change in the scope of work undertaken by some roles, redeployment of some people to different roles and by not extending a number of the limited tenure employee’s contracts.

“We will ensure if additional requirements are added to a role that they will be able to be performed successfully keeping safety as our number one priority.”

As well as being a leading jobs provider, the lead smelter has long caused health problems for the residents of Port Pirie, and recent research suggests that the problem has worsened between 2014 and 2018.

The maximum acceptable blood lead level in Australia is five micrograms per decilitre (µg/dL).

A 2018 report by SA Health showed average results for two-year-old children in Port Pirie was 5.8 µg/dL – 3.6 per cent higher than the previous year.

“Most concerning is the increase in the number of children with blood level levels equal to or exceeding 20 µg/dL, which has risen from six children in 2017, to 16 in 2018,” SA Health director of scientific services, Dr David Simon, said at the time.

“These children are receiving interventions to reduce exposure that are tailored for the specific lead sources in each situation.

“However, given the known effect of lead on children’s developing brains, preventing children being exposed in the first place is our major objective.”

Port Pirie has been a world-leading centre for lead and zinc smelting and processing since 1889.

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